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Entries tagged "wall street"

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European Victory on Taxing Speculation

October 12, 2012 ·

Cross-Posted with the Huffington Post

European campaigners for a financial transaction tax have done some awfully goofy things over the past three years.

Global Day of Action FTT-Robin Hood Tax/FlickrAt one French demonstration, they stripped down to their skivvies to emphasize the small size of the tax (0.1% on trade of stocks and bonds and 0.02% on derivatives under the European Commission's proposal). In Germany, they rented a limo and crashed the Berlinale film festival, dressed as Robin Hood characters. In many countries, they've gotten elected officials to pose with silly hats and fake bows and arrows.

But after this week, the opponents of the financial transaction tax (aka Robin Hood Tax) will no longer snicker at such antics. At a meeting of European finance ministers on October 9, 11 governments committed to implementing the tax. This is two more than the minimum number needed for an official EU agreement. And it is a huge victory for those of us -- not just in Europe but also in the United States and around the world -- who've been pushing for such taxes as a way to curb short-term speculation and generate massive revenue for job creation, global health, climate, and other pressing needs.

Of course the goofy stunts weren't the only game-changers. Campaigners have also built up strong technical arguments about the feasibility of such taxes. And a growing number of financial professionals have come out in support, blunting the industry backlash.

The broader European crisis has also been a major factor. In fact, there are rumors that Italy and Spain may have sold their support in exchange for some debt concessions from Germany. The additional eight governments in the new coalition of the willing are France, Austria, Belgium, Estonia, Greece, Portugal, Slovakia, and Slovenia. More may join in the coming months.

There are still a few hurdles ahead. There will be a round of negotiations that could result in the European Commission's proposal being watered down by lowering the rates or narrowing the base to only cover securities. There will be a fight to make sure revenues help people and the planet instead of the big banks. And EU heads of state will have to vote by a qualified majority to give the initiative the green light. This means some countries that don't plan to implement the tax themselves will still need to sign off on it. The biggest opponent, UK Prime Minister David Cameron, may have some obstructionist tricks up his sleeve.

But according to Peter Wahl of WEED, one of the key forces behind the German campaign, "there is now quite a strong political will behind the project, so that we can expect definitive implementation rather soon, perhaps already during 2013."

Europe's dramatic step forward can only boost the growing U.S. grassroots efforts for a Robin Hood Tax. Our current Treasury Secretary, Timothy Geithner, has been a naysayer, sometimes even chastising European leaders for considering the idea. But with Geithner heading out the door after the election and Europe moving towards raising revenue off the tax, we may get a blast of fresh thinking.

 

Sarah Anderson directs the Global Economy Project at the Institute for Policy Studies.
Follow her on Twitter: www.twitter.com/Anderson_IPS 

7 Ways to End the Deficit (without Throwing Grandma under the Bus)

September 5, 2012 ·

This post originally appeared on Yes! Magazine's New Economy blog.

This fall, the U.S. Congress is going to wage a pitched, dragged-out battle over cutting roughly $120 billion a year to solve the so-called deficit crisis. Vital things like teachers’ jobs and Medicare could well get cut.

The Right is already launching new coalitions to push for an austerity budget, calling for cuts in “wasteful government spending,” including key safety-net programs like Medicare, Medicaid, Social Security, and food stamps. America has overspent, they say. America is broke. But at the same time, they are calling for an extension of the Bush tax cuts and ruling out cuts in military spending—both policies that will increase the deficit.

It doesn’t have to be this way. My colleagues at the  Institute for Policy Studies (IPS) have identified seven steps that, together, more than eliminate the deficit while making the country more equitable, green, and secure.

America is not brokeThese proposals, from the IPS study called “America is Not Broke,” would also address the two deficits that author David Korten says do more to erode our society than the fiscal deficit does: our social deficits (rising poverty and inequality) and environmental deficits (starting with the climate crisis).

More Fairness, Less Deficit

Our first three proposals could bring in $329 billion a year; this alone would solve the deficit problem while helping to close the yawning inequality gap.

  • 1.  Tax Wall Street: $150 billion per year. A tiny tax on stock and derivatives transactions, which several European countries are on track to adopt, would discourage Wall Street speculation, fill the hole in the deficit left by the Bush tax cuts, and leave plenty left over to fund lots of programs. The National Nurses Union and many other allies are fighting hard for this.
  • 2.  Tax Corporations and Stop Tax Haven Abuse: $100 billion per year. The Financial Accountability and Corporate Transparency coalition has pointed out that one of the main ways that corporations avoid paying taxes is by declaring their profits in overseas tax havens like the Cayman Islands.  
  • 3.  Tax the Wealthy Fairly: $79 billion per year. Our rigged tax code lets CEOs pay a lower tax rate than their secretaries do (as Warren Buffett keeps pointing out). The proposed Fairness in Taxation Act (HR 1124) would address this by adding five additional tax brackets for incomes over $1 million.

These three policy changes would go a long way toward making our society more equal, and that means better health, too. There is a terrific body of global evidence, a lot of it compiled by British researchers Richard Wilkinson and Kate Pickett, that more equal societies are much healthier. People at all income levels live longer; they are more fulfilled; and there is less violence. The United States, a relatively equal society as recently as the 1970s, is now off the charts in terms of wealth and income inequality. It doesn’t have to be that way. Just as we created a more just and vibrant economy and a strong middle class through fair taxes between 1940 and 1980, we can do it again through progressive taxation.   

More Green, Less Pollution

The second source of revenue would make the economy more green, a key imperative in a world where the environmental crisis is now as deep as the economic one. We found two simple ways to raise revenues and help save the environment.

  • 4.  Tax Pollution: $75 billion per year. A tax on the carbon content of fossil fuels would reduce our dependence on oil while cutting air pollution and emissions of greenhouse gases. And, as economist Robert Frank pointed out on August 25 in The New York Times, “News that a carbon tax was coming would create a stampede to develop energy-saving technologies.”
  • 5.   End Fossil Fuel Subsidies: $12 billion per year. This call should unite left and right. Why would anyone want to maintain a giant government subsidy to an industry that is the world’s major contributor to fossil-fuel emissions? 350.org has made this a centerpiece of their work. We should be able to win this.

More Savings, Less War

Finally, there are simple ways to cut the military while making the country and the world more secure. More than half of government discretionary spending now goes to the military. Congress has long avoided cuts, in part because they equate military spending with jobs, but IPS has pointed out that almost every other industry employs more workers per dollar than the military. Plus, there is now bipartisan support for two sets of significant cuts.

  • 6.  End Military Waste: $109 billion per year. A broad spectrum of experts has found over $100 billion a year in waste that could be eliminated with no sacrifice in security. Three recent commissions, two of them bi-partisan, have recommended roughly $1 trillion in military cuts over 10 years.
  • 7.  Close a third of our overseas bases and our Iraq operations: $21 billion per year. Over two decades after the Cold War ended, the United States still maintains roughly 1,000 military installations in other countries. A majority of the President’s own deficit commission, which includes three Republican senators—the National Commission on Financial Responsibility and Reform—backed a proposal to close one third of our overseas military bases.

These seven simple steps would raise close to $550 billion a year. They would quickly erase the fiscal deficit  and return the country to a healthy budget surplus. There would be hundreds of billions left to invest in key sectors that could make the country more secure, more green, and more equitable: care jobs, green jobs, infrastructure jobs.

In other words, this plan could help erase the nation’s dangerous social and environmental deficits.

Many groups—from Jobs with Justice to National People’s Action to the AFL-CIO—are organizing to counter a push by the Right to use the deficit crisis to shred social programs and our nation’s safety net. Let’s up the ante and spread the message. America is not broke. We have plenty of resources to rebuild shared prosperity in the U.S.

Happy Days Here Again, 21st Century-Style

March 13, 2012 ·

We can wait all we want, but sometimes history never gets around to repeating.

The equalizing that began in the 1930s didn't just happen. Average Americans made it happen.History — more specifically, the history of the Great Depression in the 1930s — has been a constant presence in America’s political discourse ever since the Great Recession started slamming us in 2008.

Analysts have drawn all sorts of useful and entirely appropriate parallels between the run-up to the Great Depression and the years before the Great Recession. And inequality — the gap between America’s rich and everyone else — has figured prominently in those parallels.

In 1928, the year before the stock market crash, America’s richest 1 percent were taking in just shy of 24 percent of the nation’s income, a modern-day high.

In 2007, the year before our Great Recession's Wall Street meltdown, America’s top 1 percenters were pulling in 23.5 percent of the nation’s income, the top's highest share since 1928.

But the parallels go even deeper.

The early years of both the Great Depression and the Great Recession hammered incomes at America’s economic summit. In 1928, the nation's top 1 percent were averaging just over $400,000, in today's dollars. Two years later, that top 1 percent average income had dropped by half, to just over $256,000.

The early years of the Great Recession had much the same impact. America’s top 1 percent averaged $1.44 million in 2007, the year before Wall Street's epic meltdown. In 2009 top 1 percenters averaged over $520,000 less, more than a 36 percent dropoff.

Back in the Great Depression, after the initial income shock for the super rich, the shocking would continue. Top incomes kept dipping as the Great Depression wore on. Average top 1 percent income didn’t reach the $256,000 level of 1930 again until 1936 and didn’t regain 1928’s $400,000 level — the inflation-adjusted pre-Great Depression high-water mark — until decades later, in 1965.

By that time, the incomes of America’s bottom 90 percent had jumped from just over $9,400 — their 1928 level — to nearly $28,000.

In other words, in the three decades after the onset of the Great Depression, the incomes of America’s top 1 percent — after you take inflation into account — essentially didn’t rise at all. Over those same years, Americans in the bottom 90 percent saw their average incomes triple.

No gains for America’s rich. Big gains for average Americans. By the 1960s, those average Americans were sharing in the wealth their labor created. The United States had become a fundamentally more equal and prosperous place.

A history worth repeating? Absolutely. But this history, new data released earlier this month indicate, isn't repeating. Not at all. Our contemporary rich have already resumed their rocket ride to ever grander fortune.

The rich back in the 1930s were still reeling three years after the Great Depression hit. The rich today, we now know from the newly released data, are reeling no longer.

The new data comes from University of California at Berkeley economist Emmanuel Saez, the scholar who has revolutionized our understanding of America’s highest incomes with his work over the last decade.  

Saez has spent this last decade parsing IRS statistical records to tease out the incomes of America’s richest, over time, and compare the incomes of these rich — in the top 1, top 0.1, and top 0.01 percent — to the incomes of much more average Americans.

Earlier this month, using newly available IRS data, Saez updated his numbers, to take the U.S. income story through 2010. The Great Recession, Saez found, is most definitely no longer following the Great Depression script.

Back in the early 1930s, incomes for America’s top 1 percent were still dipping two, three, four, and more years into the Great Depression. In our Great Recession, the dipping of high incomes hasn't even lasted two years.

In 2010, the incomes of America’s top 1 percent did not decline. These incomes rose sharply — by an average $105,638, or 11.6 percent, over 2009 levels.

Incomes for America’s bottom 90 percent? These incomes did continue to dip in 2010 — by $127, to $29,840. Some perspective: In 1973, after adjusting for inflation, America’s bottom 90 percent took home an average $33,795.

So where do all these numbers leave us? Back in 1929 Coca-Cola filled the airwaves with what would prove to be an all-time classic advertising slogan, “the pause that refreshes.” Our Great Recession, if current income trends continue, may prove to be the pause that refreshes . . . inequality.

The Great Depression began a hammering of incomes at the top that left the United States more equal. The Great Recession, the new Emmanuel Saez data suggest, will have nowhere near that impact. Our rich appear about to regain most all the ground they lost in the Great Recession's early stages.

But we need some caveats here. The equalizing that began in the 1930s didn't just happen. Average Americans made it happen. They marched and rallied and staged walkouts and sitdowns. They elected candidates who fought to level up America’s least fortunate and level down our most fortunate and powerful few.

All this mobilizing would take years to make a significant equalizing impact. We today can make a significant equalizing impact, too. We just need to get going. History will only repeat if we make it.

Occupy vs. the Global Race to the Bottom

February 22, 2012 ·

Ever since the first tent was pitched in Zuccotti Park in September 2011, the Occupy protests have been giving life to a “99 percent movement.” Expect to hear a lot more from them: plans for a 99 percent spring—starting as early as April—are now in the making.

The 99 Percent Spring is coming. Photo by Glenn Halog.This still very young movement has focused attention on a well-reasoned explanation of the vast suffering in this country, an explanation that is resonating with the broader U.S. public. It is often posed this way: For thirty years, Wall Street firms have successfully lobbied the US government to give them freer reign, by removing regulations and lowering taxes. In the process, these firms became uprooted and detached from lending to Main Street businesses and instead became more like casinos making money for the one percent through risky instruments such as derivatives based in sub-prime mortgages. This casino Wall Street economy increased inequality, corrupted our politics and politicians, and provoked the economic crash in 2008—a crash that left tens of millions unemployed, homeless, mired in debt, and vulnerable.   

This narrative is not only compelling and tragic, it is also correct. But the Occupy analysis is thus far primarily a US-centric one; it often leaves out the reality that all of us in this country are part of a corporate-driven global economy.   

So here is a fuller picture:

In addition to Wall Street speculators, the other dominant forces of the U.S. economy over the past three decades have been global firms like General Electric, Exxon Mobil, and Apple. These firms spread their global assembly lines and resource extraction to countries like Mexico, China, and the Philippines where, in a quest for cheaper costs, they can more easily evade worker rights and environmental regulations. This global corporate economy pits U.S. workers and communities against poorly enforced Third World worker rights and environmental rules in a “race to the bottom” in terms of rights and standards. These global firms simply say to governments and workers: lower your wages and standards or we will move our operations elsewhere. They either get what they want or they move. 

And, just as Wall Street speculators rewarded elected officials in the United States who passed local and national laws to remove regulations, so too did the global manufacturing firms reward members of Congress who passed trade and investment rules that gave corporations protections. Case in point: the 1994 North American Free Trade Agreement which granted corporations powerful rights and protections while offering only weak social and environmental “clauses.”

The 1990s era of globalization accelerated the proliferation of global assembly lines with sweatshop conditions. United Students Against Sweatshops and others have exposed the horrors of garment assembly lines for decades. Today the exposès continue, most recently of Apple’s global assembly lines. As a January 2012 New York Times investigation revealed, hundreds of thousands of workers assembling Apple iPhones in China are denied basic rights, exposed to dangerous toxic chemicals, and live in squalor. 

With this lens, one can better assess President Obama’s recent tour of industrial states where he proclaimed that manufacturing jobs are returning to the United States in part because wages and working conditions here are now “competitive.” “Competitive” masks the grim reality that real U.S. manufacturing wages have been stagnating or falling over this period and workers have accepted lower wages to prevent the real threat of corporations moving their jobs to China. This is hardly something we should applaud; we want good jobs – good for workers, good for the environment, good for community. 

Adding this global component also reveals more about what needs to be part of our agenda for change. Until now, most of the 99 percent agenda has focused on reducing inequality by reining in Wall Street and cutting its influence on our corrupted politics. Many groups have advocated for fairer taxes on the wealthy and Wall Street, and various measures to prevent the one percent from purchasing elections and elected officials. These are critical starting points.

But to these important proposals, let us also add new mechanisms to enforce internationally recognized worker rights and environmental standards everywhere, including workers’ rights to organize independent unions, an end to child labor, and the right for communities to know of potential environmental dangers. Another way to support this “race to the top” is by ending trade agreements that provide corporations with investor rights to sue governments but do not provide workers or communities or the environment with stronger protections.

Likewise, let us also push proposals to shift the incentives away from global trade and investment and back toward revitalizing “Main Street” by encouraging more production and investment locally. Much of what is traded across borders, from food to clothing to electronic gadgets, can be produced—with less stress on the environment—much closer to home. Worker-owned co-ops in Cleveland, for example, are now producing food and linen for local hospitals and universities that used to come from far away.        

This expansion of the Occupy story to address to challenges of corporate globalization is one logical next step in the Occupy trajectory. Indeed, many in the Occupy movements have already embraced Occupy protests and movements in other countries, from England to Nigeria to dozens of other countries around the world. Let us embrace the 99 percent everywhere with a global analysis and a global agenda.

How Occupy is Transforming Our National Conversation

November 23, 2011 ·

Shift your gaze for a moment from the lurid headlines of police shutting down Occupy sites in Oakland, New York and other cities to the scene on a sunny day in early November here in Washington, D.C. In front of the grandiose U.S. Treasury Department building, thousands of nurses dressed in red shirts gathered holding high large signs proclaiming: “Heal America: Tax Wall Street” and “Tax Timmy’s Friends” (as in U.S. Treasury Secretary Tim Geithner). They and their allies next marched to the Bank of America, then to the Occupy D.C. site, and onward to the corridors of Congress. Their rallying cry: a tax on the speculative trades that dominate Wall Street.

These nurses are one of many reminders of how far we have come since Occupy Wall Street pitched its first tents in Zucotti Park on September 17 and of how much the national conversation has shifted. They remind us how significant have been the successes of the Occupy movement, whatever happens to those tents.

Nurses are among the Occupy protesters changing the national converstion. Photo by Glyn Lowe.Occupy has already succeeded in challenging the old, faulty dominant story spread by the 1 percent and replacing it with another one that resonates with what most Americans know to be true.

For the thirty years until September 17, the dominant national narrative was framed by the overarching philosophy of free-marketers like Ronald Reagan, Margaret Thatcher, and Milton Friedman. Starting around 1980, they successfully sold a story-line that government should step aside, eliminate regulations, and let the “free market” and its large corporations create prosperity for all of us. As for the resulting rise in inequality? Not to worry, their storyline argued, this was not a problem because everyone had a chance to get rich and anyone who did not – well, that was their own fault.

Across the world, for years, millions of people challenged this elite-driven and elite-benefiting “Washington Consensus.” In Brazil, for example, landless workers occupied farmland and ultimately helped elect a government of the 99 percent. Similar movements helped elect governments that challenged the 1 percent in Bolivia, Uruguay, Ecuador, El Salvador, Venezuela, and elsewhere.

But, in the United States, the dominant story persisted for decades, drowning out the voices of victims and critics — leaving us with a callous national narrative that tolerated obscene wealth among the few, mounting poverty among the many, and an escalating gap between the two.

Tolerated, that is, until Occupy Wall Street.

The signs and chants of “we are the 99%” have broken the spell, liberating the public imagination to unearth the true narrative of what has happened in this country and across the world during the past three decades.

Pay no heed to what the self-serving mainstream pundits of the 1 percent say about the Occupy movement. The reality is this: Occupy has already succeeded. It has succeeded in shaking us as a society out of our hypnosis. Occupy has already succeeded in its role as a social movement in challenging the old, faulty dominant story spread by the 1 percent and replacing it with another one that resonates with what most Americans know to be true.

The truth: The policies and practices of giant corporations and the U.S. government over the past three decades have rigged the system to benefit the 1 percent. The truth: The resulting inequality has grown to grotesque levels not seen since the first “Gilded Age” 100 years ago. Inequality is crushing millions, while destroying our democracy.

Ignore also what the pundits of the 1 percent are telling you about who is at Occupy. The Occupy sites are not filled with partying spoiled rich college kids. There are ordinary people, some who have lost jobs, some who have lost homes, some who cannot find jobs, most who had lost hope. People who are tired of being blamed, tired of feeling alone, and tired of not being heard.

Now, they are being heard and they are not feeling alone.

In choosing Wall Street as its main initial site, Occupy brilliantly changed the narrative to focus on the real villain: a Wall Street that gambled the hard-earned savings of ordinary Americans and precipitated the crash of 2008. A Wall Street that was then bailed out by the 1 percent in the U.S. Congress.

Pay no heed to those pundits who say that Occupy will fail unless it puts forward a specific list of specific demands. This is not the role of a social movement such as Occupy. Rather, if Occupy can keep the spotlight on this new narrative, this gives space, power, and voice to other groups to put forward specific demands on behalf of the 99 percent. Case in point: those nurses who marched with other Occupy supporters on that sunny day in early November to demand the tax on financial transactions of the 1 percent.

Indeed, as the nurses rallied in Washington, three of their leaders joined in a demonstration thousands of miles away in France, pressing leaders of the world’s 20 largest economies including President Obama to embrace this tax. Obama had previously been opposed. But, as IPS fellow Sarah Anderson reported from France: “After the protests, Obama stood up in France at a news conference with the French President Nicolas Sarkozy. And, to our surprise, Obama announced that he was now open to the financial speculation tax.”

In sum: Occupy is successfully shifting the national conversation and, in doing so, it is opening the door to a new realm of possibilities.

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